FCC backs right to unlock cellphones

For a decade consumers have been able to keep their cellphone numbers when they switched wireless carriers. On Monday, the Obama administration and the Federal Communications Commission said consumers should also be able to keep their actual phones.

For consumers, being able to take their iPhone or any other type of handset with them when they switch carriers could make it easier to take advantage of lower rates once an initial contract is fulfilled. That might mean more price competition and more choices for customers.

The administration and the FCC announced that they will urge Congress to overturn a last year's ruling by the Copyright Office of the Library of Congress that made it illegal for consumers to unlock their cellphones, opening the protective software that restricts most phones from working on another carrier's network.

Most consumers probably are not even aware that there is a process that would allow them to keep their phone when they switch from one national carrier to another – but only after they have satisfied the initial service contract.

The freedom to keep a phone regardless of carrier has become a popular cause in tech-savvy circles, and an online petition to the White House gained more than 100,000 signatures in a month, prompting a response.

“If you have paid for a mobile device, and aren't bound by a service agreement or other obligation, you should be able to use it on another network,” R. David Edelman, a senior White House adviser for Internet, innovation and policy, wrote in a blog post on the White House website.

“It's common sense,” he said, and raises concerns about consumer choice, competition and innovation.

Without a change, the potential consequences for unauthorized unlocking, under the Digital Millennium Copyright Act, are a $500,000 fine and five years in prison.

O.C. GRAD PETITION

The petition was started by Sina Khanifar, who graduated from Mission Viejo High School in 2003 and moved to the United Kingdom for college, bringing the cellphone he purchased in California with him. When he got there, he said he learned that his phone wouldn't work on any local network because it was locked. He figured out how to change the programming on his Motorola phone so that it would work and launched a company in 2004 to help others do the same. That's when he got a letter from Motorola warning him about violating the DMCA and saying he faced its penalties.

In 2006, an exemption was granted to allow unlocking “when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network.” Khanifar continued his company, which is now run by his brother, and the money helped him fund his next two startups. When the rule was recently changed, however, Khanifar started the petition to make unlocking permanently legal.

“A lot of people reacted skeptically when I originally started the petition, with lots of comments to the effect of “petitions don't do anything,” Khanifar said. “The optimist in me is really glad to have proved them wrong.”

Wireless phone companies say they do not understand what the fuss is about. Big carriers have policies that allow for phone unlocking on request once a user has fulfilled the initial contract. And, the carriers say, there are plenty of places to buy an unlocked phone to be used on a pay-as-you-go basis.

“We'll unlock your device if you've fulfilled the terms of your service agreement,”
AT& T said. “And, if you bring an unlocked device that will work on our network, we'll sell you a SIM card and service.”

The key, therefore, is whether a cellphone designed to operate on one company's network will operate on another company's system. Unlike in Europe, cellphone systems in the United States do not all operate using the same technology, so a phone from one carrier might not easily transfer to another.

Michael Altschul, a senior vice president of CTIA – The Wireless Association, a trade group representing cellphone companies, said the national wireless carriers only insist on a phone remaining locked for the duration of the service contract so they can recover some of the cost of their subsidy that reduces the phone's purchase price.

UNLOCKED PHONES

Consumers have long been able to buy phones that are unlocked, but that usually requires paying full price, often several times the subsidized price at which carriers offer phones on a two-year contract.

For example, an unlocked iPhone 5 can be bought from the
Apple store for $649; the same phone from AT& T is $199 if the buyer accepts a two-year contract for wireless service.

The ban on unlocking cellphones became an issue with the passage in 1988 of the copyright act, which makes it illegal to circumvent digital protection technology. Unlocking a phone requires altering software that restricts use of the phone to a certain network and runs afoul of the act.

But until recently, the copyright office had granted an exemption for mobile phones, subject to review every few years. Last year, however, the copyright office did not renew the exemption, prompting protests from the tech community.

The Library of Congress issued a statement Monday saying it agreed with the Obama administration that unlocking phones “has implications for telecommunications policy” and should be reviewed by Congress and the administration.

User Agreement

Keep it civil and stay on topic. No profanity, vulgarity, racial
slurs or personal attacks. People who harass others or joke about
tragedies will be blocked. By posting your comment, you agree to
allow Orange County Register Communications, Inc. the right to
republish your name and comment in additional Register publications
without any notification or payment.